From: Washington Post/Wonkblok
By Keith Humphreys
A National Academy of Sciences committee meets this week to study a large, growing and little-understood black market in drugs. But rather than cocaine, heroin and methamphetamine, the committee members will be discussing tobacco cigarettes.
The global black market in tobacco is estimated to supply 11.6% of the world’s consumption, a startling 650 billion cigarettes a year. And there are two components to this market that have drawn the particular scrutiny of law enforcement: fake cigarettes and tax avoidance.
The reason why fake cigarettes are big business will be obvious to anyone who tunes in to Mad Men. Cigarettes have arguably been marketed internationally more effectively than any other American product. The resulting worldwide recognition of the Marlboro Man, Joe Camel et al. means that hundreds of millions of smokers are willing to pay a premium for famous Western brands. This has created a lucrative opportunity for criminals – overwhelmingly based in China — to repackage over 100 billion cheap cigarettes a year as marquee Western brands.